Different forecasts indicate that home prices may decline by between 5% to 20% from their peak.
Introduction:
Home prices have started to drop from the scorching figures they reached during the COVID-19 pandemic, and no one knows yet how far they will fall. Ian Shepherdson, the chief economist at Pantheon Macroeconomics, estimates the decline could reach 20% by next summer. Meanwhile, economists at Wells Fargo Securities expect a decrease of 5.5%, while Goldman Sachs anticipates a price drop between 5% and 10% from peak levels. Sam Hall, a property economist at Capital Economics, predicts an 8% decline. If Shepherdson’s prediction of 20% is realized, the drop will be slightly less severe than the real estate market crash in the early 2000s, when the market collapsed and prices fell by 26% from the peak achieved in early 2007.
Key News:
Due to the skyrocketing mortgage rates making it less affordable to buy a home, economists widely expect home prices to drop by between 5% and 20%. Many economists state that it is unlikely we will see a repeat of the housing market crash that began in 2007, when prices fell more than 26% over several years.
Declining Home Prices:
The article discusses the current state of the real estate market where home prices have begun to decline due to rising mortgage rates, noting that a price drop started in July 2021. It emphasizes warnings of a housing market crash and an affordability crisis. The article provides evidence of declining markets, reduced buying and selling activity, and rising mortgage rates. It highlights that the previous decline is a result of deteriorating demand and sales in the market and increasing mortgage rates.
Possibility of Weak Correction:
Experts believe there are reasons to think home prices will decline slightly rather than experience a crash. There are several reasons leading to market stability in the face of high demand and a lack of homes for sale. Reports from real estate organizations indicate a continuing shortage of housing, and this expectation could prevent a drastic price drop. Additionally, lending standards have tightened, and the financial position of potential homeowners has improved as preparations were made for an economic recession over the past decade. The report adds that persistent demand and supply shortages mean a real estate market crash should not be expected.
Source: https://www.thebalancemoney.com/home-prices-are-falling-will-they-crash-6753910
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